Hedge funds have turned bearish on US natural gas futures for the first time since 2024, reflecting growing expectations of ample domestic supply and softer demand conditions across key consumption channels, according to a report by Bloomberg citing data from the US Commodity Futures Trading Commission (CFTC)
The CFTC’s figures show money managers moved to a net-short position of 11,316 contracts in Henry Hub futures for the week ending 26 May, reversing a net-long position of 15,270 contracts in the prior week. The shift highlights a rapid change in sentiment following a period of relative optimism earlier in the year.
Short positioning also increased materially, rising by nearly 20,000 contracts to 437,598, the highest level seen in more than two years, according to the same dataset.
The bearish repositioning comes against a backdrop of sustained pressure on US gas prices, which have fallen roughly 10% year-to-date. Mild weather patterns have reduced heating demand, while strong domestic production has kept inventories above seasonal norms.
US natural gas has diverged from broader energy market trends in recent months. While geopolitical tensions, including the conflict involving Iran, have supported global oil and fuel prices, US gas markets have remained weighed down by structural oversupply.
A key factor has been the link between crude oil production and associated gas output, particularly in shale-rich regions such as West Texas. Increased oil drilling activity has contributed additional natural gas supply, at times overwhelming local infrastructure and pushing regional prices into negative territory.
Despite the broader bearish positioning, US gas prices have shown intermittent volatility. Benchmark futures rebounded in recent sessions after government data indicated a smaller-than-expected rise in storage inventories, prompting some short covering among funds and triggering a short-term price recovery.
The latest move underscores the sensitivity of gas markets to storage data and weather-driven demand shifts, even within a broader oversupplied environment.
Analysts note that while short-term price spikes remain possible due to weather fluctuations or technical positioning, the underlying supply-demand balance continues to favour elevated inventory levels and subdued price momentum.
